Refer to the graph shown. Suppose the economy is initially at A but then the Fed adopts a contractionary monetary policy. Using the standard AS/AD model reasoning, this policy will cause the economy to move to:
A. B in the short run and the long run.
B. C in the short run and A in the long run.
C. C in the short run and E in the long run.
D. A in the short run and the long run.
Answer: C
You might also like to view...
Suppose the economy had been operating along a given short-run Phillips curve for several years and then experienced a year of stagflation. The year of stagflation would: a. be represented as a move upward along the short-run Phillips curve. b. be represented as a move downward along the short-run Phillips curve. c. be represented as a point above the short-run Phillips curve
d. be represented as a point below the short-run Phillips curve. e. correspond to the origin.
If both the demand and supply curves for computers shift to the right, the price of computers may rise, fall, or remain unchanged
a. True b. False
The balance of payments records transactions between:
(a) Households and firms in a particular country. (b) Residents of one country and the rest of the country. (c) Residents of one country and the rest of the world. (d) Between residents of all EU countries only.
The Board of Governors is made up of experts in:
A. international trade. B. banking. C. fiscal policy. D. All of these are true.